Yet Another IR35 Question

[expat]

I use a Ltd Co but do not pay any dividends (I choose not to because of my personal belief that it would not be right). I seem also to get by without having to pay for training, and I don't buy huge amounts of stuff. I do have travelling expenses but these would all be allowable under Schedule E anyway.

It has been pointed out to me that I shouldn't really mind being caught by IR35, so perhaps I needn't try to hard to fall outside it. But I'd like to put the question differently: given that, if IR35-caught, you can claim 5% of income as expenses without justification (HMRC IR35 FAQ ), wouldn't I actually be better off by insisting that I am caught by IR35?

[malvolio]

No. If only because under IR35 you can effectively draw 95% of your gross as salary whereas outside you can take 100% - spend all your income on salary and you won't have a profit and hence no CT liability.

Stupidly naive and expensive way to run your life though. What's wrong with dividends as a reward for work?

[expat]

No. If only because under IR35 you can effectively draw 95% of your gross as salary whereas outside you can take 100% - spend all your income on salary and you won't have a profit and hence no CT liability.

Stupidly naive and expensive way to run your life though. What's wrong with dividends as a reward for work?

Thanks for the reply. But surely if the money all leaves the Company by year-end, there is no profit and no CT liability, regardless of what the money left as (whether salary, receipted expenses, or 5% allowance)?

What is wrong with dividends as a reward for work is that IMHO wages are the reward for work; dividends are the reward for investing capital. Like Adam Smith said.

I am not trying to argue anyone else into this position, I'm perfectly happy for others to hold that that distinction should not necessarily have the consequence that it does in the UK of a large difference in tax in the form of NICs; and therefore to take their wages in the form that the government label "dividends". But that's how I do it. It is expensive but it is not naive; whether it is stupid is a matter of opinion.

[To BI or not to BI?]

Thanks for the reply. But surely if the money all leaves the Company by year-end, there is no profit and no CT liability, regardless of what the money left as (whether salary, receipted expenses, or 5% allowance)?

What is wrong with dividends as a reward for work is that IMHO wages are the reward for work; dividends are the reward for investing capital. Like Adam Smith said.

I am not trying to argue anyone else into this position, I'm perfectly happy for others to hold that that distinction should not necessarily have the consequence that it does in the UK of a large difference in tax in the form of NICs; and therefore to take their wages in the form that the government label "dividends". But that's how I do it. It is expensive but it is not naive; whether it is stupid is a matter of opinion.

I admire people who stick with their principles, even if that costs them. Respect to expat.

Now, where did I put that "Dummy guide to tax avoidance"?

[malvolio]

Fine. You're wrong and you're wasting money but hey, it's your money. Your whole approach is deranged but who am I to argue.

In passing, you might note a long standing principle of UK taxation, endorsed most recently by Norman Lamont on the introduction of separate taxation for man and wife, that it is perfectly permissable for an individual to arrange his tax affairs to his best advantage. Do not be misled by the current government's insane desire to strip as much income as possible from anyone and everyone to fund pointless and damaging social experiments that we will spend years recovering from.

[Ardesco]

You may as well go umbrella....

What is the point of running a LTD co if you do not take advantage of relevant tax breaks you are entitled to such as claiming dividends from profit, purchasing equipment/office supplies used in your role.

But i digress, I would not claim 5% no mater what, make sure that you have recipts to prove that your expenses are valid. When the tax office changes it's rules again and backdates them to 2004 you will be caught out with a large liability and put in the position of making fraudulent expense claims.

This would put you in the position of not taking the money out of your company in a perfectly legal way (i.e. dividends) but instead fraudulently claiming expenses.

I would suggest a better way would be stay outside IR35 and take a dividend that will equate to the 5% you could claim in expenses instead if you can reconcile that with your beliefs, safer in the long run IMHO

Again IANAL etc

[ASB]

I use a Ltd Co but do not pay any dividends (I choose not to because of my personal belief that it would not be right). I seem also to get by without having to pay for training, and I don't buy huge amounts of stuff. I do have travelling expenses but these would all be allowable under Schedule E anyway.

It has been pointed out to me that I shouldn't really mind being caught by IR35, so perhaps I needn't try to hard to fall outside it. But I'd like to put the question differently: given that, if IR35-caught, you can claim 5% of income as expenses without justification (HMRC IR35 FAQ ), wouldn't I actually be better off by insisting that I am caught by IR35?

I am aware of your strange - at least in my opinion - view. I think you would be slightly better of - by the taxation on the 5%.

However, if you follow your belief that you should be paying PAYE on it all on the grounds that is wages how do you square that with claiming the 5%?

If your answer is "because thats the rules" then surely you are just being just as selective as say "well I'll pay divis because I can" - although it's not so profitable.

If you could give me your company name I'll shop you to hector and then this can raise the interesting spectre of him trying to force sombody to be outside IR35 who wants to be in it.

[expat]

I am aware of your strange - at least in my opinion - view. I think you would be slightly better of - by the taxation on the 5%.

However, if you follow your belief that you should be paying PAYE on it all on the grounds that is wages how do you square that with claiming the 5%?

If your answer is "because thats the rules" then surely you are just being just as selective as say "well I'll pay divis because I can" - although it's not so profitable.

That's a very good point. Hmm. I might say that I agree with HMRC that I may be deemed to be "employed", but in a legitimate structure (the PSC) that has extra expenses, for which they allow a flat 5%. It's a pretty fine distinction though.

If you could give me your company name I'll shop you to hector and then this can raise the interesting spectre of him trying to force sombody to be outside IR35 who wants to be in it.

Well, this was what amused me about the thought too

[Denny]

I'm only going to say this once

Fine. You're wrong and you're wasting money but hey, it's your money. Your whole approach is deranged but who am I to argue.

In passing, you might note a long standing principle of UK taxation, endorsed most recently by Norman Lamont on the introduction of separate taxation for man and wife, that it is perfectly permissable for an individual to arrange his tax affairs to his best advantage. Do not be misled by the current government's insane desire to strip as much income as possible from anyone and everyone to fund pointless and damaging social experiments that we will spend years recovering from.

Malovio. I decided to cross the fence when I was informed some threads had started about me. I'm only going to post this once.

You are the biggest hypocrite going. You have the audacity to call me 'dimwitted' which readers of these threads have disagreed with, and lacking in any communication skills by alienating audiences. Yet you call the CUK a kiddies forum, but what about your comment above?

You are rude, insensitive and self opinionated. No newbie escapes from your rasping reprimands and cutting comments. Clearly, you think you are vastly superior them and think it perfectly acceptable to be as unhelpful as possible. Not to mention self serving - what with your holier than though 'fountain of wisdom' approach to condescending members of here and me too.

Also, to correct you on a number of points. I have not advocated Qdos insurance on the PCG forum. I don't think it's a problem, but I don't remember specifically promoting it. I am not wrong about the legal definition of EBs and I was told recently that the term PSC was in fact the correct legal definition.

How dare you criticise me by making the comments you have on these two threads. You are supposed to be an advocate for the PCG, but all you've managed to achieve is to demonstrate to readers on here that you are more than happy to stab new fee paying PCG members in the back by slagging them off on forums they used to post on.

What does that say about you? Disloyal, rude, self-promoting and aggrandising.

Take a good hard look at yourself first before spouting off about me. As it happens, I haven't alienated people. I have a PM folder full up from posters who write to me asking for my advice and replying with grateful comments for my help and support. I've even helped people after leaving this hell hole.

I don't purport to be an expert on any subject. But I do have good judgement and my advice has been well received - on the recruitment industry ; on Ir35 and, of course, on you.

Thank you to those readers who have said nice things about me on here.

Malvolio - why don't you f***k off.

[Mindomoo]

And YOU are the most egotistical self important ee3jit I have ever met, in real life or in cyberspace.

You are a **** wit of the highest order. You know jack tulip about what you claim to.

I suspect you failed in a previous enterprise and took up IT and now feel put out that others manage to do such a scam better than you can.

If I looked in the mirror and saw what you see - I'd run and hide.

Malovio. I decided to cross the fence when I was informed some threads had started about me. I'm only going to post this once.

You are the biggest hypocrite going. You have the audacity to call me 'dimwitted' which readers of these threads have disagreed with, and lacking in any communication skills by alienating audiences. Yet you call the CUK a kiddies forum, but what about your comment above?

You are rude, insensitive and self opinionated. No newbie escapes from your rasping reprimands and cutting comments. Clearly, you think you are vastly superior them and think it perfectly acceptable to be as unhelpful as possible. Not to mention self serving - what with your holier than though 'fountain of wisdom' approach to condescending members of here and me too.

Also, to correct you on a number of points. I have not advocated Qdos insurance on the PCG forum. I don't think it's a problem, but I don't remember specifically promoting it. I am not wrong about the legal definition of EBs and I was told recently that the term PSC was in fact the correct legal definition.

How dare you criticise me by making the comments you have on these two threads. You are supposed to be an advocate for the PCG, but all you've managed to achieve is to demonstrate to readers on here that you are more than happy to stab new fee paying PCG members in the back by slagging them off on forums they used to post on.

What does that say about you? Disloyal, rude, self-promoting and aggrandising.

Take a good hard look at yourself first before spouting off about me. As it happens, I haven't alienated people. I have a PM folder full up from posters who write to me asking for my advice and replying with grateful comments for my help and support. I've even helped people after leaving this hell hole.

I don't purport to be an expert on any subject. But I do have good judgement and my advice has been well received - on the recruitment industry ; on Ir35 and, of course, on you.

Thank you to those readers who have said nice things about me on here.

Malvolio - why don't you f***k off.